Trends in Fixed Income Trading 2016


Metamodern Meditations on the Future Market Structure

This report forecasts how the structure of trading in the fixed income market could change over the next five-to-10 years. Specifically, the report reviews trends observed in the marketplaces for government bonds, interest rates swaps, corporate bonds and single-name credit default swaps over the course of the second half of 2015 and into 2016 impacting the ability of buyside and sellside market participants to access fixed income liquidity and form prices.

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The report argues that, in 2016, fixed income liquidity remains concentrated on a handful of exchanges in which investor demand to buy or sell bonds or swaps is distributed across many different investment banks. However, post-financial crisis regulations – specifically the Basel III Accords and the incoming Fundamental Review of the Trading Book proposals in addition to central bank quantitative easing monetary policies – are forcing fixed income liquidity to become more centralised around a wider community of banks and non-bank liquidity providers. As a result, access to fixed income liquidity is becoming more fragmented as a wider range of trading venues emerge to allow buyside  firms, banks and non-bank liquidity providers more equality in the ability to source liquidity and form prices.

Published on: 25 May, 2016

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Trends in Fixed Income Trading 2016 – Table of Contents

  • 1.0 The Structure of the Fixed Income Market is Becoming Distributed
    • 1.1 Government Bonds
    • 1.2 Interest Rates Swaps
    • 1.3 Corporate Bonds
    • 1.4 Credit Default Swaps
  • 2.0 Fixed Income Trading Business Models are Transitioning
    • 2.1 The Sellside
    • 2.2 Clearinghouses and Exchanges
  • 3.0 The Future Structure of Fixed Income Trading
    • 3.1 A New Generation of Structured Products
  • 4.0 Appendices
    • 4.1 Glossary of Terms
    • 4.2 Table of Figures